Published on March 19th, 2018 | by Steve Hanley0
What Would Happen If Tesla Fails? Is The Electric Car Revolution Real This Time?
March 19th, 2018 by Steve Hanley
Surfing the web for headlines this week, I can across an article written for Forbes by Michael Lynch, a self-styled petroleum economics and energy policy analyst, according to his bio. In it, he featured a famous quote from Kevin Crane, the publisher of Automotive News. It goes like this: “When I arrived on the automotive scene more than a couple of decades ago, people told me that the electric car was about five years away from production and sale. Today, the electric car is about five years away from production and sale. When I die, the electric car may be five years away from production and sale.”
That quote appeared in a Reuters story entitled “Carmakers Struggle to Bridge Clean Power Gap.” It was published 22 years ago, on March 6, 1996. Lynch’s story asks this question: “If Tesla goes belly up, will the electric car revolution survive?”
Lynch draws an analogy to the time after the OPEC oil embargoes when US automakers began offering diesel-powered sedans to customers as a way to maximize fuel economy. General Motors assigned the task of converting a production gasoline engine to run on diesel fuel to the engineers at Oldsmobile. The result was an unmitigated disaster, for reasons described in exquisite detail by AutoTrader in an article entitled, “When Diesel Was Dreadful: The Oldsmobile Diesels.” Not only does that article provide details unknown to most gearheads, it is written in a breezy style with quite a few lines that are laugh out loud funny.
The issues with the Olds diesel engine were three-fold. First, the engineers used the same number of head bolts with the same strength rating as the gas engine. The diesel compression ratio was 22:1 — three times that of the gas engine. Not surprisingly, the head bolts were unable to handle the load, head gaskets failed, and water from the coolant got into the cylinders. Those of you with an engineering background know what happens when a piston designed to compress an air/fuel mixture encounters an incompressible substance like water. Things inside the engine like connecting rods, bearings, and such bend or break. To say the least, the engine runs poorly with broken internal bits.
Second, the engineers failed to include a water separator in the fuel system. Water in diesel fuel quickly destroys the complex and very expensive fuel injection mechanism. Acceleration, which on a good day was leisurely in the Oldsmobubbles fitted with diesel engines (0-60 took 16.5 seconds), got dramatically worse until it was no longer measured in seconds for the quarter mile but rather in furlongs per fortnight.
Third, the engineers decided to mate their diesel Frankenmotor with little power but copious torque to a light duty automatic transmission originally designed for the lowly Chevette. As AutoTrader reports, “The THM200 wasn’t particularly robust to begin with, and mating it with the Olds diesel resulted in a race to see which of these two large and expensive components could fail first.”
Oldsmobile soldiered on with its diesel engine until the mid-80s but the image of diesel engines for passenger cars in America would never recover. Unlike Europe, where the diesel engine became the standard bearer for the industry, Americans remembered the Oldsmobile debacle and turned their backs on diesel cars for good. It was not until 2014 that GM offered another diesel engine in a US passenger car — the Chevy Cruze. Shortly thereafter, the Volkswagen diesel cheating scandal broke and diesel engines got yet another black eye in the American market.
“Could something similar happen to electric vehicles if, say, Tesla flames out?” Lynch asks. He bolsters his thesis by suggesting electric cars are propped up by generous government incentives that mostly favor wealthy drivers. What if the political calculus changes and those incentives are withdrawn, he asks?
“[T]here is a possibility that Tesla will go belly up, as its rock star CEO becomes grossly overcommitted (both financially and in terms of his time) to the miscellaneous ‘moonshot’ projects, and the company struggles to sell enough cars to be viable,” Lynch writes. “Reports of product quality problems may prove to be unimportant, manufacturing bottlenecks might be overcome, and the end of subsidies could see consumers ready to shell out an extra $7500 for the brand, but there is a serious possibility that one or more of those won’t occur and the company could collapse under its debt load.”
OK. Lynch is a contrarian on Tesla and may or may not be an acolyte of the vast Koch Brothers empire, given his status as a petroleum economics and energy policy analyst. But does that mean he is wrong? Lots of bleeding edge technology has burst upon the scene, only to flame out — quadraphonic sound, laser discs, the Concorde SST, and Tang being just a few examples. But Lynch does not address the enormous investments that major car companies like Jaguar, Volkswagen, Daimler, BMW, Audi, Porsche and others have made and will continue to make to bring electric cars to market. That momentum will not dissipate soon no matter what happens to incentives and regulations.
Despite the fact that many nations and several world cities are threatening to ban cars with internal combustion engines in the foreseeable future, could electric cars go the way of the dodo or become mere curiosities for collectors? Sure, it’s possible. Except for one thing.
The factor that exists now that didn’t exist previously is the transition to renewable energy. As we have seen just this week, stodgy old utility companies like Xcel Energy are tripping all over themselves to get into the renewable energy game. Economics is the key. The entire world runs on the principle that given a choice between two products, the majority of consumers will opt for the less expensive offering most of the time. Renewable energy is winning the hearts and minds of utility company executives because it is now cheaper than coal, natural gas, hydro, biogas, or concentrated moonbeams. Renewable energy and electric cars go together like Shiraz and Stilton cheese.
Electric cars are ideal for soaking up excess renewable energy, especially solar power made from abundant sunshine in the middle of the day. And the greener the electric grid becomes, the more vital electric cars will become to keeping the Earth from overheating and killing us all. Lynch suggests that electric car incentives are an inefficient and hugely expensive way to reduce greenhouse gas emissions, but tellingly, he doesn’t share with his readers what alternatives he favors. Nor does he display the sense of urgency many of us in the clean tech field feel.
Lastly, competition for grid-scale battery storage contracts will put downward pressure on battery prices for electric cars. Lynch is correct to say EVs won’t rule the roads absent government support until they cost no more than conventional cars. That is axiomatic in a world ruled by capitalist theory. But that day is not just a gleam in Elon Musk’s eye. It is coming, and faster than many people realize.